Why Isn’t My Label Business Worth More?

Rock, I appreciate that you work with family businesses and owner-operators to make them stronger, so here’s a question for you. After the 2008 recession, I was proud our family label business made it through strong, so I had a valuation done. To my surprise, the business was not valued at the level I expected or hoped for. In this new up-and-down economy, we’re still checking the boxes for steady revenue and net profit, and our customers love us. What are we missing?

You sound like a solid businessperson with the desire to plan for a profitable exit from your label business. That’s good. Being educated will help you get the most for your business when it’s time to sell. Getting a valuation for your label business was a smart move.

I would like to review your last valuation. I need to see the type of provider that generated the report, what was included, and how the criteria were weighted.

After we review your valuation, let’s talk about what you were expecting and why.

• Were you basing your expectations on the asking prices of other companies for sale that were similar to you?
• Were you looking at announcements of deals in our industry?
• Did a broker ballpark a number based on your gross revenue and easy-to-access public information about your company?

I’d like to understand how you arrived at your ideal number.

The next step is to analyze comparables.

It’s important to understand that the deals publicized through PR agencies and newsletters from brokers are basically works of fiction. They are incomplete pictures of how the final agreements were structured. Most sales have elements that are not revealed. These include adjustments and discounts, tax shelters, the disposition of assets, intellectual property, royalties, and other transactions. Also, sometimes a seller puts cash back into the company to help the buyer. Or, the seller may stay on as an employee or advisor. The numbers you see in the press releases from the brokers are spun to include the positives and omit the negatives.

Getting a current valuation from a qualified provider is the first step to determining an asking price when it’s time to sell your label business.

To understand your value – which is not the same as the asking price – a qualified provider (like LaManna Consulting Group) will do the proper research based on current financials and market conditions. We will look at who’s buying right now and their criteria. We will show you different options for each deal and compare the pros and cons.

Our proprietary research combined with public information helps us determine a range of values. From that information, the seller consults with our professional advisors to determine a reasonable asking price.

Because you were proactive and had a valuation done as a tool in your growth arsenal, I assume you are looking for strategic ways to strengthen your next valuation.

As we complete our research for you, we will look at the types of buyers who would be most likely to pay a premium or fair price for your company. We also need to uncover if there are areas that will negatively impact your valuation.

I suggest you download and review Acquisition Criteria for Printing Companies, a special report from my team of experts prepared for companies like yours. This insightful guide will help educate you about how to make yourself more attractive and marketable to buyers.

Next, a current valuation prepared by a qualified provider will help you understand all the factors that go into assigning a value to a company like yours.

And, if you decide to grow the business or improve your marketability, we can help with that as well.

You can see why we can’t take public information about deals at face value to determine what we can ask as a selling price for our business. You need a current valuation from a qualified provider – and guidance from an experienced advisor who will look out for your interests. It starts with educating yourself on the factors that influence the value of a business.

After you’ve read our publication, give me a call, and we can discuss your options.